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Turkey PVC market fails to ride recovery in sentiment

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 07/10/2022 (10:21)
PVC prices started October mostly on a soft note, excluding rollover attempts from European suppliers, who have been cutting their run rates in response to unaffordable energy costs in the region. Slack demand across domestic and export end markets kept buying enthusiasm thin and outweighed supply limitations in the first days of the month.

Improved sentiment proves short-lived

By mid-August, the sentiment had recovered since diminishing import supply from Russian producers amid turnarounds and news about a planned shutdown at Petkim propped up the market.

Although end users’ demand lagged behind the seasonal patterns due to economic challenges, sellers stopped offering aggressive prices after depleting their stocks during a free-fall in May-July.

Nonetheless, the market failed to ride the recovery since modest hike attempts in September failed to materialize. This was mainly because activity slowed again following August purchases. Buyers secured bulky volumes from the USA and Egypt before going to the sidelines amid recession fears across the board.

The new high ends for Egyptian PVC faded shortly after hikes faced stiff resistance, while a Taiwanese major’s drops for October curtailed traders’ firmer price attempts for American origin last month.

CIF Turkey – Import Prices – K67

Egyptian PVC traded lower for November

Some players expect reduced volumes from Europe as the region has been on the brink of a deep energy crisis and recession while sellers try to offset muted demand with lower output. Still, regional sources approached Turkey mostly with rollovers under the shadow of demand contraction. Yet, their prices, at around $1100/ton CIF Turkey, did not grab much interest from consumers, most of whom have some material on the way.

Moreover, Egyptian PVC K67 posted new discounts of $30/ton from last month to be traded at $920-930/ton CIF for November cargos on the low end of the market this week, reinforcing the pressure on other duty-free origins. “Despite the huge discount to spot European markets, sellers were unable to lift their PVC prices to Turkey,” opined players.

According to the weekly average data from ChemOrbis, Turkey’s duty-free K67 market trades around $670/ton below Europe’s spot market nowadays.

A profile manufacturer commented, “Demand has been a tad better owing to repairs ahead of the winter. Nonetheless, this uptick will probably not be sustained through Q4 with the current macroeconomic scene.” Some others confirmed keeping their resin purchases at a bare minimum amid concerns that economic woes and lower €/USD parity will hamper Turkey’s end product exports.

Concerns about a possible influx of Chinese cargos

The pending safeguard measure by India on Chinese PVC imports has caused jitters among players that Turkey may face an influx of cargos from the country in the coming term. Adding to these projections have been steeply lower freight rates from China.

China has raised its market share in India from 17% in 2021 to 37% in the first seven months of 2022 in the wake of a supply overhang and cost advantage. The rally in India’s imports from China is set to lose steam in Q4 upon this recent safeguard measure.

Looking at another major destination for Chinese PVC, Turkey has imported more than 80,000 tons of S-PVC from China in the first 8 months of this year, making the Asian giant the top supplier. Indeed, Turkey has already quadrupled its imports from China as compared to around 21,000 tons in the whole of 2021.

A look at Turkey’s supply-demand outlook for the coming term

In the short term, poor netbacks in Turkey and the ongoing supply cuts may hold import PVC markets close to the prevailing levels. Nonetheless, a considerable uptick in demand seems unlikely based on the prevailing recession concerns in Europe, the low winter season, and inflationary pressures.

Contrary to the reduced supplies from Europe, Egyptian cargos may continue to find their way to Turkey as a severe dollar crisis in the country may keep sellers focused on their exports rather than domestic sales.

More importantly, concerns about a potential boost in Chinese imports to Turkey have a point, not to mention a possible competition with Russian sellers moving into the end of the year. “Offers from Russia remain scarce for now but suppliers may return to Turkey or India once they restart their plants,” argued a trader. Meanwhile, the local producer, Petkim plans to restart its PVC plant by the first week of November, a company source confirmed.
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